gretchen: coming up tomorrow, more of my interview with laura bush. steve: where have these three hours gone? we will do it again tomorrow. same time, same channel. you, come back! [captioning made possible by fox news channel] captioned by the national captioning institute --www.ncicap.org-- bill: good morning, everyone. a continental airlines flight from brazil to houston, hitting heavy turbulence. nine passengers are being treated at area hospitals. the scene is miami, florida, where the airplane was diverted. here's a look at the airplane on the ground, where it landed safely. fire department spokespeople say that four in -- are in bad condition. this was about an eight hour flight. about one hour before the scheduled landing at around 4:30 in the morning it happened. we will monitor miami and bring

you updates from there. another fox news alert, a new reaction on the big news from the white house on the economy and health care reform. the administration saying that they will not rule out new taxes on the middle class. according to timothy geithner or, it is that -- it is not a matter of if, but when. >> the president said that taxes will not go up for americans who make less than $250,000, but it does not look like he can keep that promise. >> we cannot make any judgments about what it will take and how we will get there. bill: good morning, everyone. i am bill hemmer, live in -"america's newsroom." megyn kelly -- megyn: president obama might have to break his campaign promise, putting the middle-class on the hook to help to pay them a growing deficit. that deficit is now expected to

top $2 trillion next year. that is before we and in the cost of health care reform. bill: stuart varney, fox business network, with us live. 94 taking with us -- taking this with us one at a time. >> the writing is on low wall and it has been for some time. it's as this, middle america is going to have to -- and it says this, middle america is going to have to pay for this with taxes. just for confirmation, let's take another look at timothy geithner's interview. >> roger altman said that it is no longer a matter of whether tax revenues must increase, but how. is he right? >> george is absolutely right. it is important for everyone to understand, we will not get this country back on track unless we

can convince the american people that we have the will to bring things down once recovery is firmly established. >> you have a right there, quite clear. absolutely right, we have got to raise more tax money. it is widely acknowledged that the rich cannot pay for it all. coming down the food chain means middle american taxes are going to go up. my guess is that they will be taxing the stocks that we buy, the consumption tax. that is the only way to bring in the revenue we are talking about. bill: is that a sales tax? >> essentially a national sales tax. essentially, in europe they call it a value added tax. coming down the pike. bill: on the political side of this, timothy geithner was out there on sunday, but there was a piece out on saturday -- are they softening up? >> you are exactly right.

the bible of the democratic left, "the new york times," said that you have got to spread the tax revenue around. that is backed up by timothy geithner are, speaking on sunday. that is your time line. bill: 23 times last week, one time this week. thank you, stuart. megyn: speaking of taxes, we are getting reports that the $182 billion spent on aig may not have bought us much. audits showed dozens of companies that make up aig in a tough bind. even the taxpayers pushed in multibillion-dollar pay out into the company, several units were officially downgraded, meaning those companies may be reduced to joke status they do not receive some more much-needed funding. aig is trying to sell them to help pay off loans. not looking good.

bill: another fox news alert, this one is critical. new numbers from u.s. auto makers. these eagerly anticipated updates will give a glimpse as to how the industry is doing months after billions of dollars of government funding keep them afloat. you will see here possibly the single biggest driver of those new car sales numbers in the cash to klunkers program. guess what? on friday the fund was broke. the house gave the green light for an additional $2 billion on sunday. it is up to the senate to make a move this week. some democrats voted for it earlier in the year, making changes to it to force consumers to purchase even more fuel- efficient vehicles than the program requires. on the other side critics wonder why the automobile industry is getting another bailout while other businesses are suffering. where does it end? more coming out later today. megyn: more breaking news on the

continental airlines flight that made an emergency landing in miami. severe turbulence forcing pilots to throw away their flight plan in the middle of the flight. miami dade saying that dozens of people were injured, several in serious condition. we have word that nine were taken to hospital, 28 more treated at the scene. flight 128 was on its way from rio de janeiro to houston at the time, diverting to miami because of the severe turbulence. richard sharp was a passenger on that flight. he joins me on the phone. good morning. tell us what happened. >> about two hours before we landed we hit severe turbulence. we got an announcement that we would hit some turbulence and the fasten seat belt light was lit up. a lot of people did not fasten their seat belts, people were moving around the cabin. when they hit the turbulence, they had no time to react.

megyn: what was the weather like? >> clear. clear air turbulence. megyn: when you hit the first of it, what started happening on the airplane? >> those of us that had the seat belts on, we tightened them. it was a few seconds later when we hit severe turbulence, people were bounced around the cabin. their heads hit overhead panels. one lady in the bathroom was severely injured. she had a duty free card went on top of her. -- cart land on top of her megyn: most people have experienced turbulence. how does this compare to normal turbulence? >> like nothing i have ever experienced in my life. it was severe turbulence. it was like nothing i have ever experienced in my life. megyn: was the airplane being

tossed around side to side? how would you describe it? if you can. >> up and down. up and down, vertical motion. nothing side to side. up and down. megyn: hal were the passengers on the airplane reacting? >-- how were the passengers on the airplane reacting? >> most people were looking around to make sure that there were ok. megyn: how long did it last? clots the wor>> the worst of ita few seconds. megyn: did you fear for your life? >> it happened so quickly, there was no time to think about it. i have flown continental for many years. they do a good job. megyn: did you hear from the pilot? >> yes, one of the pilots was taking his break.

the pilot that was taking his break in the seat next to me, and he was fine. the pilot came on overhead in the front, saying to keep seatbelts fastened. it was fine. the flight crew reacted well. flight attendants reacted well. it was a well handled seen. megyn: good for them. that elderly woman that was hit by the cart, we were told that these nine folks were taken to area hospitals and that there were serious injuries. >> head injuries. head injuries. one person went through an overhead panel. the self -- people flew across the aisle or into the middle. the lights, the air vents, the oxygen masks. they were pretty severely injured. the ones that work transported were mostly head injuries.

megyn: did they not have time? was there not a enough advance notice? >> the fasten seat belt light had been lit up for nearly one hour. they had plenty of notice to fasten their seatbelts. flight attendants had made several rounds. but there would just be a slight rumble. then there was the severe turbulence and it was over. megyn: what were you doing in rio? >> working. i work in the oil industry. megyn: i take it that you are taking the day off? >> i will try. megyn: wow. you are lucky to be ok this morning. hats off to the pilot and flight crew of your flight. i will give you the parting word. any message for your fellow passengers? >> the flight crew did an excellent job, purely professional the entire way through. passengers, keep your seat belt,

and that light comes on. megyn: absolutely. thank you, richard. bill: an excellent account. in 30 minutes to talk to a flight expert about how these pilots are able to test these pockets of air. as richard pointed out, it was a clear night. no indication that the weather was bad. megyn: i spoke to one pilot one time on a flight, he knew about the clear air turbulence. i love when i sit next to a pilot that is not flying the airplane. it makes you feel better. he said that the two things that you never want to hear, one is the word brace, and two are the words severe turbulence, which you are never supposed to fly through. good for that flight crew for getting the flight down. bill: from louisiana and now, a shark attack so severe

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and bill: the white house is floating a controversial plan to close guantanamo bay, cuba. the idea is to bring foreign fighters to the u.s. heartland.

two places under consideration? fort leavenworth, kan., which you will see in a moment, and a state prison in michigan. is this a good idea? charles has been to gitmo dozens of times, he is our guest this morning. >> a good morning, bill. bill: there was a classified study under the previous administration on where to put them. spanish, michigan. where that idea come from? >> i have no idea. they floated this trial balloon over the weekend to see if it would stick. they are not allowing anyone in the administration to travel to any detention facility in the united states to check it out, they do not want the press to get wind of it. bill: they are doing this covertly. spanish, mich., well north of

detroit. you have been to gitmo dozens of times, can you move these detainee's to someplace in the u.s. and keep them safe? >> yes, you can. the fear is not that they will break out of prison. the fear is whether that would increase the threat level in that location substantially to the point where it is not worth it. the argument on one side is to keep gitmo open, transparent and humanely run. the argument made by obama, not very well, is that it hurts our moral credibility and it needs to be closed. but the case has not been made to the american people. clearly, the congress has put a stranglehold on the president until he comes up with a detailed plan. bill: he said there was an order

to close it within a year. you are here to say that there was no way to meet that deadline in six months? >> you will not meet it in six months. look, what ever facility that they pick -- let's assume it will be one facility, which makes sense, that place will have to have nine months minimum of upgrades. and they have not even awarded a contract or appropriated money for it. they have not come forward with a detailed plan. gitmo will be open well into the next few years unless and until they precipitously close it and some large -- magically garner of political support that they need to get it done. -- magically garner the political support they need to get it done.

bill: i have got about 20 seconds here. i know that you mentioned the price. some people have been mentioning $100 million to make it safe to have detainee's. in a series of bad option, what is the -- bad options, what is the best one? >> take your time. gitmo is transparent and safe, they are good where they are, take your time and make the case to the american people. he has not done so yet. build your political case to close it. bill: thank you for your time. six more months, we will see where they go. megyn: shocking accusations from the heartland. these two women, accused of running a small town sex ring with teenage boys. booze, drugs, and activities that we cannot describe on television. bill: airplane safety back in

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bill: a fisherman recovering from a shark attack on the coast of louisiana over the weekend. a 5-year-old was rescued after a short bit down on his leg. surgeons were able to save his foot. he will need more surgery. as for what to do if you ever see a shark getting too close for comfort, experts say that the first tip is recognize the behavior of a shark. i will do that quickly. megyn: [laughter] bill: if the shark is moving erratically, it is not a good sign. step two? get the hell out of there.

megyn: [laughter] bill: finally, if the shark attacks you, be aggressive. experts recommend punching the shark in the nose, it is the most sensitive spot. i thought that that was urban legend. megyn: no, no, we had an expert, on one time. bill: the eyes and nose are good places to aim. megyn: get out of there. i love that thing about sitting back to observe the shark. i think i will keep swimming. [laughter] bill: we warned you. megyn: family and friends are waiting on what will happen to three american tourists being detained in iran. they reportedly height into iranian territory by mistake -- hiked into iranian territory by

mistake. the u.s. is asking switzerland to act as the diplomatic go- between. they were vacationing in iraq and they happen to cross into iran? >> is not as strange as it might seem. a lot of tourists are coming to this area of iraq, which is relatively state -- relatively safe, kurdistan. sometimes there are western tourists. they seem very intrepid. on the issue of the border, it is a long border that is not well protected. many of the mountains of kurdistan, it is quite easy to cross the border there. but the iranians are quite strict and they could be picked up without knowing. megyn: is this going to be another laura ling situation ?

she and another journalist were caught there and were sent to prison camp. what are these three looking at? >> they could be used as political pawns. we have an example from a couple of years ago where sailors were arrested in the gulf. they were held in iran for 10 days, they had to apologize on television for transgressing into iranian waters. the strange thing is that we have not heard anything since friday. we are trying to find out, particularly from this with, what exactly is happening. megyn: at the moment i guess it is a big mystery and a big concern. thank you so much for the update. bill: i am going to take some time off this month and hike around the iranian border.

i will send you pictures. megyn: i like to go to the beach. you know what i am saying lambeau i would certainly not be crossing in a burglary into iran. neither will these three, ever again, if we can get these -- get this solved. bill: a possible scenario under health-care reform, our next guest says it would have taken her life. megyn: the senate takes up the cash for clunkers program. some people say that this is the best thing ever for car dealers and car buyers. others worry that it is driving taxpayers to the poorhouse again. we will have both sides. fair and balanced.

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megyn: downright far -- downright frightening moments on a continental airlines flight this morning. severe turbulence in during more than two dozen passengers from rio did to houston. they were diverted to miami, that is how bad that it was.

nine passengers with severe injuries. one passenger joined us moments ago to say that the injuries were mostly head injuries and fractures. he said that the entire thing last about 10 seconds, but that the seat belt light was on and the pilot worn folks, but there was not enough time to warn the folks. the most severely injured, in his observation, were the folks lying across the three open seats, as people sometimes do. an elderly woman was hit by a cart in the aisle. he said that many of these people, their bodies slammed into the top of the airplane. 28 others, in addition to the nine that were hospitalized, treated for injuries at the scene. his message for everyone was thanks to the crew for getting the flight down safely and, number two, listen to the seatbelt light.

bill: we are 32 minutes past the hour. we have reaction this morning to the story of the navy pilot, scott spiker. his family says that learning that he was dead after 18 years of doubt has been difficult. his actions in combat and the search for him will remain in their hearts and minds. he was shot down on the first night of operation desert storm in 1991. eight years later and iraqi citizen led him to a grave -- led the u.s. military to a grave where he was buried. president obama says that this brings the family needed sense of closure. megyn: as we count down to possible health care reform on healtcapitol hill, a big part of it is a new look. comparative research, this is

what it means. it could be coming to you very soon. lawmakers, not doctors, will determine which treatment is most effective. it will basically be a one-size- fits-all approach, critics say, to health care. our next guest has a special concern about it. our next guest is battling not hodgkin's lymphoma. her husband joins us as well. i know that you have been struggling and struggling with these illnesses. and you say that people are missing the point and that people are not taking into consideration how it will change the quality of care and the relationship between you and your doctor. how so? >> i have a wonderful relationship with a team of

doctors that see me as a person. when i walk into the office, they examine me, they see me. the cancer is a psychological disease as well. they see how i feel and how i will react to what they tell me to do. they have worked out a system. a radiologist that takes time to call my radiologist, who calls a surgeon, and there is a meeting of minds. a computer is not going to do that. i am going to walk into the office. they will read my number and say oh, i will look into the computer. that is how it will happen. to all of my records are placed in a database -- if all of my records are placed in a database. megyn: you say that it does not work? >> it does not, because there is not a human being with a hard looking at me so that we can converse and work out how to

deal with these diseases. there is a new way and a new day to day. we cannot go backwards, we have to go forward. doctors feel the same way. i do not think that there's a way that a computer can spit out what i need. megyn: you have been working on this since the beginning. a lot of our viewers are all over this, they read the bills, unlike our lawmakers, unfortunately. it establishes a health advisory council committee chaired by the surgeon general that makes recommendations on what should be covered and what should not. you, having gone through this, if your wife needs chemotherapy and she does not get it because the health benefits advisory committee, if she does not get it, because it is not cost- effective for her to get it, can

you imagine the frustration? >> it would be very frustrating. this kind of board tends to rule against the more expensive and cutting edge cancer medicines. megyn: in the stand at the cancer survival rate in great britain is much less? >> when i go to germany, because i go there to take a vaccine for my lymphoma, and they tell me -- they asked me if i get sanned in my american health-care system. i ask them if they do not, they say they can. they cannot monitor. megyn: what you say to the president and democrats on capitol hill, these people who do not have the advantage of medicare or medicaid or other health care, that we as a nation

have to make some sacrifices. they say that it will be financial, others say that it will be rationing. these sacrifices to help them, how do you respond? >> i paid into medicare my entire life. i do not want them to take part of my medicare reimbursement and making new system for someone who has never paid for anything. i call that redistribution of health. i think that it is not fair. we have an agreement and mine is being cut in half. i feel sorry for the people that do not have it. there are 7400 clinics and health care centers, but who uses them? not just the uninsured. there are people that come into these clinics, they get help. not just in the emergency room. they get health care. megyn: we are glad that you are getting the care that you think you need. >> not only me, but so many

people need this. there are a lot of people out there. not only the old and young. we have to be very diligent. megyn: how do you feel? >> great. megyn: you look great. >> thank you so much. megyn: thank you for coming on to tell us your story. bill: we are watching reaction to what the house democrats are doing when busy meeting with voters. here is what happened at a recent meeting of the missouri congressman, carnahan, when he tried to convince voters that this will save money in the long run. >> we have paid a $6 billion surplus. [laughter] it is important --

[heckling] it is important -- [heckling] bill: one of the lines that you hear is "give me a break, give me a break. " not long after that, we got this town hall meeting footage. it is from missouri. >> there are concerns with health care reform. [applause] bill: that cheering went on for about one minute. that happened in the last few weeks. check out how fired up this one guy got. will this. i want -- >> watch this. >> why is the single payer off of the table? bill: he likes the government's

idea for health care. a majority are calling this a bad idea. in a moment we will show you what happened with the health and human services secretary, kathleen sebelius. she was on stage with the senator in philadelphia. megyn: they got an earful. holy moly. could we soon see a spike in american troop levels? bill: a continental airlines flight that left dozens of passengers battered and bruised. with an airplane air bag have helped? >> it operates like a regular seat belt except that on one side we have an air bag full of up.

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bill: this story from oklahoma will leave you shaking your head. these two women applied young boys with booze and drugs to have sex with them. police arrested 21-year-old mindy carter and 31-year-old ashley spregg running a sex ring. the women apparently confessed the crime. >> same thing as prostitution. it was a big sex ring going on. they can get sex, drugs, smoking without their parents knowing. bill: all of the boys were under the age of 14. megyn: can you believe that it is already august? as children get ready to head

back to school we are hearing serious concerns about the flu season. florida health officials are planning for 5 million potential cases of swine flu. the state is working out the details. telecommuting to be possible for government workers. while -- wow, way to plan ahead? >> they really are planning for possible worst-case scenarios in florida. as far as statistics on the ground, there have been more than 30 deaths, at least 3000 cases. the planning is going ahead for possible worst-case scenarios. the plan is focused on the school's especially. there are hand washing programs teaching children how to courgh, -- co0ugh, and lots -- cough, and lots of plans warning parents that they may have to keep their children at home.

>> we are concerned. parents are concerned about their own jobs and whether they will allow their children to come to school if they are ill. >> of course the focus on the schools here is on the fact that this is a virus that attacks the young. megyn: is this something about that area in general that has seen this uptick in preventative measures? >> there has been a great deal of planning on the ground. right now they are focusing on possible public workers telecommuting. there is a way that will change how they pay for things in the state as well. it is an opportunity for change in florida, changing the way the government and business actually do their business. here is what the head of the committee had to say. >> an historic event. opportunities for change. this is an opportunity for both the government and the private sector to get into their

business process mode, look at what they are doing, see how they can digitize these processes and save money. >> one real concern is that another wave of the virus could hit during the hurricane season. this is something they are working on, but it will not work during hurricane season when they need to see first responders in the flesh. megyn: good point. bill, i was thinking that if you or i do not feel well, we should telecommute. we could get a sky set up -- skype set up from our apartments. bill: i am going to make some coast now. megyn: [laughter] bill: watch miwok. megyn: [laughter] you can get those cameras to watch your baby or your dog, right? would it not be wonderful to check on the internet and see

what is happening with your baby? [laughter] bill: the flu is a big deal. we already know that. many of these summer camps were forced to close, it is a big deal. megyn: a public schoolteacher, breaking her silence, claiming that she is not guilty of having sex with a teenage student. this case is unbelievable. unlike any other of these teachers student sex allegations that we have ever seen before. why is this woman now going on the offense? bill: want to fix health care? here is one way to not do it. kathleen sebelius and arlen specter, getting an earful in philadelphia. a tough scene from the weekend.

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bill: back to our developing story out of miami. passengers on board the flight from brazil, rocked by turbulence, saying that it was like nothing they had experienced before. two dozen injured, nine in the hospital. that flight was diverted to miami, florida. starting this fall, seats on new airplanes will have to have stricter strength requirements. some seats will come equipped with air bags with seatbelts -- airbags that pop out of the seat belts.

will that help to protect passengers from the accidents that we saw today? tom is a researcher, we appreciate your time. good morning. would these new devices help to prevent injuries on an airplane like this today? >> in a turbulent situation like this, most of the acceleration is vertical, up and down. air bags are designed to mitigate injury in a vertical crash. the air bags would not deploy in an incident like this. bill: you would need to have your seat belt buckle before it to even act -- activate, right? >> that is correct. bill: we were told that an elderly woman was leaving the rest room when the airplane flipped over. that the turbulence only lasted 10 seconds but that it did last

long enough to do a lot of damage. another case where even if these provisions were added to a new airplane, you would be defenseless. >> you do the best that you can to mitigate injuries, that is why i argue that you wear your seat belt as much as possible during flight. but it might not always work out. bill: we are looking at a picture of your product, the air bag it would be installed in one of the seats. i am assuming that the air bag comes with the seat belt? >> that is right, pulled into a cover on the seat belt. bill: another issue here, i am curious about this. we talked to a passenger on board one hour ago, he said that the weather was perfect. clear out side of his window, 4:30 in the morning, but there was nothing to worry about out there. how do pilots note to avoid

turbulence this severe? >> the question i cannot answer very well. i am not much of an expert on weather systems. i know that pressure variations can be there without having physical clouds, but i do not know the details. bill: there are instruments that can alert the pilots. it is true. tom, thank you for being with us, talking about this new product it will be installed on these new airplanes. megyn: we told you last week that your taxpayer money is going to find a soft porn as ar.t 50 caught -- as art. 50 congressmen are outraged. our next guests are not outraged at all. our next -- a 15-year-old

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[captioning made possible by fox news channel] captioned by the national captioning institute --www.ncicap.org-- megyn: fox news alert, cash for clunkers is now officially running on empty. $2 billion are at stake in this moment. democrats are pushing to fund the federal cars program, bankrolling detroit yet again. good morning, everybody. bill: a couple of billion here, a couple of billion there. that is all right, right? megyn: roll them out. bill: this program, designed to trade in your old gas guzzlers for a more efficient cars.

megyn: that money lasted for four days. now, $2 billion more. that is your money. can we really afford this? republicans are saying now. like emmanuel, last week saying that cash for clunkers would -- like a manual, coming from the white house. last week republicans -- mike emanuel, last week republicans said that this would run out of money. it did. >> a widely popular program, according to the secretary of brief life into car dealers. >> the program will be suspended if it does not pass a certain amount. it is authorized through november 1, but if we do not get $2 billion from the senate, the program will have to be suspended next week. >> $2 million to keep the program running, it is expected

to be approved. megyn: the question is why. why are they going to give this money to the people? why is it running in the first place? why is it so important right now to have a total of $3 billion in taxpayer money farmed out to detroit? some congressmen have suggested a cash for poultry producers program. it would be great to help a lot of industries, in other words, so how does the administration justify this money for helping an industry that we have already poured billions into. >> american consumers seemed to like it, they felt that it was successfully stimulating the economy, helping an industry that has suffered greatly. they would argue that it has proven to be stimulating in terms of giving money to auto dealerships, the auto industry in general that has been released struggling. they feel that it is working.

they feel that it is one of the things in the stimulus that has taken off. feedback from american consumers that have taken advantage of the program. megyn: is this likely to pass in the senate? what else could be coming our way? could we see cash for chickens? >> re lahood -- ray lahood says that they think they can get it done, but other republicans say that the government getting into the auto indus mre than they are is a dister waiting to happen. jim demint, saying that we cannot afford to do this. sounds like republicans are going to put up resistance. of course, the senate is going on vacation by the end of the week. megyn: thank you, mike. the recovery act for south korea? the gas that said that will be here with us in the next hour. bill: this week, health care,

many members of congress taking ideas to the voters. that is where we found this in philadelphia. kathleen sebelius and arlen specter found themselves on the defensive. they hosted a health care town hall event that was heated at times. you are about to hear two moments that brought out the public's concern for reform. >> i look at this health-care plan. i see nothing that is about health or care. what i see is a bureaucratic nightmare, senator. medicaid is broke, medicare is broke, social security is broke. the idea that the government running a cash for clunkers program is going to fix our economy? >> when you have a bill and we

have a lot of them that are 1000 pages, we take my staff and we divide the bill. we have to make judgments very fast. >> the senate bill is not written. do not boo the senator for not reading a bill that is not written. bill: august 3. we are just beginning what could be a hot night for the country. rationing health care for an expensive health care program that the country may not be able to afford. megyn: wow. when democrats in the house talk to constituents about health care reform, many of them will be working off of the same script. or at least the same card. nancy pelosi has reportedly provided house democrats with pocket cards detailing the

suggested line of attack. the tale of the card is health insurance reform through holding insurance companies accountable. she says the democrats will drive home two points. one, the plan is good for consumers. two, congress will hold the insurance industry accountable. polling shows that american love -- americans but to demonize the insurance industry. bill: from capitol hill to living rooms across the country, steve is watching the debate coming out of the sea. good morning. where, exactly, do we stand on this legislation on the senate side? >> right now the house is adjourning for its august recess. they passed legislation out of a key committee last week, the energy and commerce committee, including the controversial government auction of the republicans hate so much but conservative democrats in the

house were able to weaken. this sets up a debate for september sometime after labor day. on the senate side, they are still in session. there was a bipartisan coalition still working things out on the finance committee side, working out an alternative to the member run health care cooperatives we will see if they get some kind of agreement on that. -- cooperatives. we will see if we get some kind of agreement on that. bill: are we getting inklings of success? >> if you. republicans are taking time to campaign against the democratic plan for a public auction. and they see this as nothing but a huge government takeover, a big first step. democrats, for their part, know that a major republican blip is

coming. they are claiming that the gop simply wants to support or protect the insurance industry, a big business ally of the gop. the white house will be involved, trying to steer the debate. bill: thank you for that, steve. he comes to us live from capitol hill. chrysler, trying to up the ante, doubling down on the cash for clunkers rebate. why might someone have wanted to plan ahead on that idea? megyn: "america's newsroom" has been leading the pack in sketchy stimulus spending. look at what is on your screen. we are not trying to titillate you, we are trying to show you where your taxpayer dollars are going. believe it or not, you funded debt. waste, for taste, and it's the vendor -- defender.

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bill: chrysler is leaving their double your cash campaign in the rearview mirror. they increased the ante on the cash for clunkers rebate. that was for customers that traded in their vehicle for a new fuel-efficient one. chrysler dealerships saying that they are out of cars. not enough inventory. big change from last month. this federal program might also come to a call tomorrow. it might not make much of a difference. an update on that extra billion, the dealerships are hanging on the line. they expected the government to reimburse them. $500,000. for cars already in contract. they have got to figure it out. megyn: $787 billion, your tax payer dollars, for the massive stimulus plan. the national endowment for the arts got $80 million of your

money. that money went to theaters staging shows like "herbert's put out."; now, 50 congressmen are protesting loudly. some of the arts community are defending the move. joining us now is an artist, victor hugo, 94 coming on. >> how are you? megyn: i am fine, kelly. - thank you. you are an artist. even by artistic standards, you have got to admit this stuff is pretty racy. $50,000 for 18 key part porno horror film, complete with a gorilla? you can understand why people would not want their money going to something like that, can you not? >> i can see where people would

be off guard about that. i would like to say that i am not in defense of foretaste -- poor taste. should be trying to create beauty in this crazy, mixed up world. but i do believe that we have to finance the arts, it is fueling the natural evolution of civilization. if we do not pay for the arts, it will be detrimental to our society. megyn: ok, so the arts sounds good. should we be paying $25,000 for "perverts' put out" as we apparently have? >> with regards to that, i believe that the fundamental question was not about cutting off funding for the arts. we do not want to stop freedom of expression. his point was why we are funding artists that are not supported in the marketplace, which is a

good question. as far as the artwork being offensive, i have something called crackhead jesus that is attending a lot of people. but the point of art is to make people think outside of the box. i have not seen the are being complained about. megyn: we are showing some of it. >> i would have to see the whole thing. you are showing bites of it. it is dangerous. you cannot look at a piece of a piece of art. megyn: they are too dirty to show the whole thing. we cannot show genitalia on our program. >> that is fine. megyn: even just the name. "perverts put out? people do not want their money in those, victor. this stimulus package uses taxpayer dollars. not just for the so-called rich. but people that go to work every day to take care of their families.

churchgoers, people that do not want to fund this. can artists like you, even though you have some controversial projects, object as well? to shut down these groups from getting the money so that mainstream or maybe slightly less than mainstream, but not these weirdo groups, would get the money? >> i do not want to comment on them as far as being reared zero groups i personally -- being weirdo groups. i personally find the title funny. megyn: i would not like to find anything that is described as explicit fund. "to catch a creditor" put people behind bars. >> i agree with you. but you mentioned that the title was offensive. maybe if they changed the title, was my point. but what we are getting at, this

is what the modern art world is trying to do, raising awareness by pushing the envelope. right now with everything that people are seeing on the internet and on the radio, nothing shocks anyone anymore. sometimes as artists we have to quite literally grab you by the artistic throat. now that we have your attention, we can educate. i can see the reactions of the people. one thing that i can give credit to the artists for is the fact that they are getting a discussion about art, something that is very important and lacking in this country. megyn: there is a real question as to whether this qualifies as art. i believe that to the experts, which i am not. but i do understand the objection. >> let me correct you. megyn: i will make my point first. in a standing objection of taxpayers who say that they do not go to work for 13 hours a day laying pipe so that i can find new stimulated sextet says,

or pornographic or films. i have better things to do with my taxpayer money, might save for my children's education. that is -a point that i get. >> i appreciate my point -- i appreciate that point as well. but i disagree with what your saying, that you are not an art expert. art is in the eyes of the beholder. some people would consider this art, it was considered such an funded that way. megyn: do you not think that with taxpayer dollars there should be discernment between projects that are generally accepted in the mainstream field and projects like this? if you take your argument to its logical conclusion, we could put taxpayer money into xxx pornography. >> have you ever been on a film set? i am not defending pornography,

i do not defend the exploitation of women or children. but if you have ever been on a film set, it is art, it takes everybody to get together. making a film, whether it is pornography or disney, it is art. it is what it is. you do not have to like all of the art. i do not like it all. megyn: i agree that you do not have to like it. but my point is that you should not have to fund it. victor, you are a good guest. thank you for coming on. i would like to point out that we asked the national endowment of the arts to send someone. it would not do it. you came on and made a good argument. we appreciate your being here. >> your welcome. congratulations, by the way. bill: what were they doing with that glove? megyn: four men, three women, and a gorilla. bill: we cannot show that on

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and we're walkin'... making it all a bit easier -- now that's progressive! call or click today. megyn: this is a fox news alert. we just got some interesting new polling numbers. take a look at this. 48% of americans surveyed say that the u.s. health-care system is good or excellent. just 19% think that it is not good. that is a significant increase in the support for the health care system as it currently exists. in may it was just 35%. at the beginning of august, 48%

are saying that they like the health-care system as is. there was similar falling by "the wall street journal" suggesting that people are not without -- not behind the plan to overcome health care. we found that the health-care products -- health care quality might decrease of the plan goes through. bill: house members are out, meeting with voters. megyn: you saw how that went. watch how these numbers go as we go into august 3. bill: the industry is withering away in california, they lost more than half of a million manufacturing jobs going back to 2001. they were once a powerhouse, producing everything from computer chips to aerospace technology. taxes are crushing the congress. what are the hard numbers,

william, on manufacturing jobs? >> one, consider this a warning. other states are considering bigger government. california, as you said, the eighth largest economy in the world. basically, here in california they take scrap copper and brass, turning it into resources for other businesses. they have lost half of their staff in the last year. part of that is the economy, but according to a new study the other reason is the bigger government and higher taxes, as well as i costs while the legislature. take a look at this. california has been losing more than 15,000 jobs per year. that is at a faster rate than the nation as a whole. neighboring states like arizona,

oregon, and nevada, have added more than 62,000 jobs. they say that the executives here are not getting the red carpet treatment like they are in other places. neighbors were complaining about the smell, but the local air quality district came in saying they needed new equipment, and 300 jobs were lost, relocated. one solar panel manner -- solar panel manufacturer wanted tax rebates, but that was thousands of jobs out of california. of course there is a domino effect. when you lose these manufacturing jobs, others go as well because there are no suppliers to supply them. no. 2, when you make them uncompetitive, what happens as they go to asia or lose out to companies in lower manufacturing

places? >> the changing face of american business. thank you for that. megyn: the top u.s. general in afghanistan, expected to say that he needs more forces to help to fight the war in that country. how many war and -- how many more and for how long? what does it mean for military families? answers, coming up. bill: senior citizens, anyone age 65 or older, required to sit down with an end of live counselor every five years to figure out critical care. critics call this a step toward euthanasia. we will debate that. geico's been saving people money on car insurance for over 70 years.

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you can make a positive change in your career. you can make a greater contribution to the greater good. and you can start today, by earning your degree online... at walden university. where advanced degrees advance the quality of life. megyn: the top u.s. commander in afghanistan could soon recommend a big expansion of the forces in that country. the majority of the increase would affect the afghan army and the police. the assessment team is expected to announce that the forces

should be doubled. that could also require an influx of american troops to get them trained. jennifer griffin has more on this. good morning. will the general be asking for more troops? if so, how many? of >> that was the golden question in the beginning. as we march towards this review, a lot of the top officials in the pentagon say not to assume that he will be asking for more troops. i understand that an early draft shows it could be as large as four to six brigades. listen to john mccain from over the weekend. it looks like the acting -- >> it looks like the afghan army will have to be significantly increased. it appears as if we need more troops. >> senator mccain is on his way through afghanistan, but it

looks likely that there will be more u.s. troops. >> getting the troops out of iraq was such a huge issue for the president. many people think that is why he got a elected. would sending more troops to afghanistan create some political problems for the president? >> absolutely. that is what the reasons i have been told that general mcchrystal is not going to ask for these resources when he submits his strategy review. it will be a separate request for resources. there is a greek -- great deal of understanding that this will put president obama in a difficult bind, because afghanistan, most agree, will become a bloody war, getting worse before it gets better. it will politically be very difficult. i have heard some described the

president as a reluctant commander-in-chief. it is interesting to note that he has only had one meeting with the joint chiefs here in the pentagon, right after he became commander in chief. megyn: what does that mean? >> it means that the president sits with the joint chiefs for the chairman of the joint chiefs, in a secret room where nothing that goes in comes out. it is where the president gauges the head of the armed services. megyn: jennifer, thank you so much. bill: we are told that the house health care reform bill has a proposal that would provide senior citizens, if aged 65 or older, you would be required to sit down with a counselor every five years.

supporters say that this will help to save a lot of money in the long run. critics suggest something more ominous. here in new york, on the other side we have our fox news medical contributor. hello to both doctors. this has been in the new york post. doctor, you wrote it, "if the president has his way, the art of medicine will be lost. how so? >> it is on a patient by patient basis. we sit down and we go over the choices. a health choices commissioner, what is that? do we need the government coming in to determine what we need them but many of my elderly patients are living longer than ever before, we have medication

and procedures to thank for that. do we need the government telling us that? >> why would that change the care that you get if the government said you should do a, not be. >> first of all, we do not know the extent to which they will be enforcing that. second, i do not want my 65- year-old thinking about what will happen. i want them on a treadmill, exercising. the reason that we spend so much in the last 10 years of life is because physicians are afraid of malpractice. there is need for tort reform and we are not seeing that. bill: let me keep it focused on this program. doctor, what he is arguing is that the government comes between the doctor and the patient and that is what all doctors are afraid of. >> at this point, right now you have the insurance industry

doing that. but no one is suggesting that physicians will not be allowed to use their best clinical judgment. i think that this is a healthy discussion, and it is much better to have this discussion well people are able-bodied. bill: hang on, mark, i will get your response in a moment. i am concerned about the individual. why would your care be the same as mine or anybody else's? >> and no one is suggesting that it would be. this is encouraging patients to have discussions with clinicians about their desires. nothing is healthier than having physician's knowing what the desires of the patient are. how they did you finish up from that is frightening and fear mongering. -- how they get euthanasia from

that is frightening and fear mongering. >> with all due respect, she is fear mongering herself. i am already sitting down with my patients to have this discussion. this month of the democrats will come out fear mongering again. my office manager sat down with me today. we'd agree with private insurance on a case by case basis. my problem is that with all of this increased oversight, i do not need the government coming into my room telling me what to give my patience. >> no one is suggesting that. >> that is what they are suggesting. if you are doing that, having that discussion, i am not aware. the majority of physicians are not having that discussion. frankly, it is a difficult discussion to have. >> doctor, the government has made a mess of medicare.

there are physicians extending policies even further. medicare is a single pair already. let's see it moved to the point where it is cost-effective and helps with these decisions. bill: the government, what have they done lately that is efficient? >> looking at medicare and the cost overhead, they file much less while insurance company takes up to 33% of every dollar for administrative overhead. the majority of people are happy with their medicare. bill: medicare costs are shooting through the sky, doctor, you know that. >> but they are much less than the private insurance industry. the idea that medicare is the problem is just of founded. >> i disagreed. there is a lot of wasted health care and people are using it unnecessarily.

everyone agrees that it is going bankrupt. bill: we also agree that the system has a lot of waste out there. sometimes you have got to get a jackhammer to clean it up. great to have you both on, really. this was a very good discussion for us to think about. thank you to you both. >> thank you. megyn: do you know someone that just got a rebate in the cash for clunkers program? maybe your neighbor got a nice new hybrid? how much of that money came out of your pocket? because you asked. and, fired from her job, accused of having sex with her student. this 26-year-old teacher is breaking her six months silence. that is "kelly's court," coming up.

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megyn: "kelly's court" is back in session. a teacher, breaking six months of silence on the charges that she slept with a 16-year-old student, she says that it is a set up. nicole howard was fired by a kentucky public school district and booked for first-degree sexual abuse, a felony that could require several years in prison if she's convicted. accused of inviting a teenager to her apartment for a call and sex. now she is finally speaking out, by before trial, refusing all plea deals in claiming that the evidence proves that she is innocent. how does a jury figure this one out? let's ask our panel. good morning. if this goes to trial, it will not be often that these kinds of

things go to trial, usually there is a plea, but not here. she had one lawyer, fired it and got a new one. now she has both guns blazing. is she actually casting serious doubt on the story here? >> absolutely. the best defense is a great offense. that is exactly what she is saying. she says that there is no evidence on any of these allegations. she went to the principal initially and said that if any of these were filed, that there was a rumor that she had a three sum. but that it was completely untrue. rather than looking into it, she was arrested and fired. that is when the nightmare began. frankly, if she is ultimately convicted, and it does not seem like she will be, she could face serious charges. megyn: she could kiss her career

as a teacher by as well. on the other hand, just because she says that it is not true, that does not mean that it is not. >> it is usually not a good idea for a defense to go public with their case, and this proves it. they began an investigation, the miner had a description of the inside of an apartment that matched detail for detail. the minor even described a tattoo on her back. c'mon, megyn:. give me a break. the grand jury only had to find by a preponderance of the evidence that this took place. the district attorney cannot bring the case to the grand jury unless he or she believes that they can make the case beyond a reasonable doubt. all in all, they have a lot of evidence, but there must be more than we know about. when the grand jury had this

case, it did not take long for them to decide. megyn: how about that? the prosecutor said that he was going to try the case in the courtroom, not in the media. but, the prosecutor said trust me, of i have enough to prove this case beyond a reasonable doubt. the accuser came out and said that they had sex not just once, but at least four or five times. he goes into detail about this and who knows what else. does that cause you any pause on your throwing out of his testimony? >> one of the things that the prosecutor has not said is the way that these allegations arose. when this student was confronted with possible expulsion made an interview the student and the student said that there was no

truth to that. megyn: he denied it initially? >> exactly. they said that if you do not tell the truth, we are going out there. we know that it must have happened, because where there is smoke, there's fire. i have to say, how will coming on to the offensive, that is huge. she is saying she is going to sue everyone. those are big things. megyn: how about that. he denied it initially, then a polygraph was administered in which she passed. does that not make you stop? >> there must have been an initial report that this happened, only then did it turn into denial. the social dynamics of h.r. -- child being molested are entirely different from a female

child. they face a different grade of humiliation and embarrassment. you are looking for something else as well. this teacher said that she had never seen the student outside of the school setting. yes, he described the inside of her apartment to 80. megyn: she claims that he messed it up. there were text messages between them, but she claims they were platonic. she also claims that the prosecutors offered her a plea with no jail time and the ability to go on sex offender registration. if that is true, the prosecutor does not think much of the case. one final word for our viewers, just because she denies the charge does not mean that it is bogus. having said that, what is the proof? the teenagers were? it will take more than that. if you slept with someone five times, could you not proven of

detail to -- to do not provide enough detail to prove it? this mandates an open mind at the trial. bill: 10 minutes before the hour, cash for clunkers is out of cash. will the senate vote to get another $2 billion for a program that's the word barney calls the south korean recovery plan? he is here next. his caller is hot. . . .

[captioning made possible by fox news channel] captioned by the national captioning institute --www.ncicap.org-- bill: we get the falling by calfed. my neighbor just got a new car in the cash for clunkers program. how much of that $4,500 that he got was my money?

stu varney from the fox business network is with us now. >> the first $1 billion came out of the stimulus program. the next $2 billion will also be read-allocated. almost all of that stimulus money was borrowed from foreigners like china. we borrowed the money from china, we took it into the u.s. treasury, we then use it to pay for tax cuts for the wealthy -- some of that goes to south korea. we are buying lots of kias and hyundais. bill: how the world turns. these dealerships -- their upper until 1:00 in the morning. they are assuming or they're hoping that the government comes through with the reimbursement

check. some of these dealerships are on the hook for $500,000. are they going to get the money? >> the dealers are confident that the senate will extend the program with an additional $2 billion. if it does not go through, i would not be at all surprised that the obama administration will say, we will give you it on an emergency basis. somehow or other, they could because the $2 billion will come either from the stimulus program -- it could come from the tarp program. it is supposed to come from the stimulus program. i am an american taxpayer. bill: thank you. have a question that you want answered? there's an empty chair to my left. megyn: we are getting a lot of

e-mail. this one is from pat in washington. she says, when i reach 65, i will not be talking to any government person about this issue. if anyone tries to make me, they will only have one chance and they better make it count. thank you for sharing your one- sided opinion, pat. another story we have been falling throughout the hour, dozens of people have been injured at 30,000 feet. at least nine of those injuries are considered serious. another 28 were treated at the scene. turbulence like you have never seen it before from passengers who witnessed it firsthand. what are you doing for lunch? how about beer-battered shrimp and chips... or one of our coastal soup and grilled shrimp salad combinations? eight dishes that fit into your lunch hour... starting at just $6.99.

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bill: i think theor